Online Sales of Video Games, Consoles & Accessories Explodes

The top-gaining e-commerce category in Q2 versus year ago was video games, consoles & accessories, which jumped 159 percent on the strength of Nintendo Wii and PlayStation 3 sales. Sport & fitness also saw substantial gains (up 58 percent), followed by consumer electronics (up 51 percent) and event tickets (up 44 percent).

The chart below shows the top 10 eCommerce Categories for Q2 2007 vs. Q2 2006:

1. Video Games, Consoles & Accessories (159%)
2. Sport & Fitness (58%)
3. Consumer Electronics (excl. PC Peripherals) (51%)
4. Event Tickets (44%)
5. Jewelry & Watches (32%)
6. Furniture, Appliances & Equipment (25%)
7. Music, Movies & Videos (24%)
8. Computer Software (excl. PC Games) (23%)
9. Books & Magazines (22%)
10. Apparel & Accessories (20%)

Source: comScore, Inc.

U.S Online Consumer Spending Likely to Reach $200 Billion in 2007

Total U.S. online consumer spending reached $170.8 billion in 2006, with non-travel spending accounting for $102.1 billion and travel spending accounting for $68.8 billion. Based on the first-half growth rates, total U.S. online consumer spending is on track to reach $200 billion in 2007.

According to the Economy Ministry, Mexico was the world’s 10th most important vehicle producer in 2007, with production exceeding 2 million. The auto industry’s domestic importance is huge. National Institute of Statistics and Economy Ministry figures show that it represents about 3% of gross domestic product, 15% of manufacturing output, and employs some 1 million people.

Auto production in 2007 reached record levels. Moreover, there has been a clear, strong recovery over the past two years, after significant falls in production in 2000-2004. This trend seems set to continue:

–Vehicle production stood at 188,090 units during April, a 28.4% year-on-year increase.

–The January-April total, at 679,981 units, represented a 13.8% year-on-year rise.

Exports are the main growth driver–from January-April the number of vehicles sent abroad rose 18.5%. While the U.S. market remains (and will remain) the most important destination for auto exports, there is some diversification Exports to Europe in January-April represented 14.4% of the total, up from 10.0% last year. Meanwhile exports to the U.S. declined from 76.4% to 71.5%.

The $3 billion Ford will invest is significant for the overall economy, given that total foreign direct investment in manufacturing in 2007 stood at $11.5 billion. Only foreign acquisitions of Mexican banks represented bigger capital inflows.

Moreover, it represents a national success, as the United Auto Workers union lobbied hard to produce the Ford Fiesta for North America in U.S. territory (part of the investment will be geared toward this).

Mexico has important advantages for the global auto industry, namely:

–geographic location and increasing integration with the U.S. economy–virtually all plants are in states bordering the U.S. or in the center of the country;

–wage competitiveness: Mexican auto workers earn about one-sixth of U.S. counterparts–though China’s are lower, the gap with Mexico is shrinking;

–an experienced and relatively large pool of qualified workers;

–a stable political system and growing domestic market;

–the peso mostly mirroring the U.S. dollar, providing some certainty on exchange rate movement–the peso has not appreciated as strongly as other industrialized and emerging economy currencies.

However, drawbacks are also significant, and may hinder growth. Infrastructure development is behind industrialized countries. Inputs are expensive–for example, until recently, Mexico had the industry’s second-highest electricity costs, after Japan. Labor unrest, while infrequent, has also flared up in recent years.

Mexico could become a global production center for small vehicles, yet high input costs and poor infrastructure must first be addressed. Production falls have happened in the recent past, and recent gains could prove reversible in the absence of appropriate policy.

The menu, which will debut in stores Aug. 6, will feature two new flatbread sandwiches made with egg whites. Customers will be able to choose either a turkey sausage egg-white sandwich or a vegetable one. Both will be under 300 calories with 9 grams of fat or less, the company said.

”We just felt it was important to provide some choice in our menu,” said Will Kussell, president and chief brand officer.

The new menu will be called DDSmart and will include all current and new items that either have 25 percent few calories, sugar, fat or sodium than comparable products or contain ingredients that are ”nutritionally beneficial,” the company said.

Current products that will join the new sandwiches on the menu include a multigrain bagel and a reduced-fat blueberry muffin.

Kussell said Dunkin’ will continue to add products to the menu and is currently developing several new offerings, but would not disclose any details.

Kussell said Canton, Mass.-based Dunkin’ Brands Inc. will spend several million dollars marketing the new menu.

A number of restaurants have added better-for-you options to their menus in the past few years to take advantage of a trend toward healthier eating.

”We’re staying very true to our brand and very true to our heritage,” said the company’s executive chef Stan Frankenthaler. ”We’re just growing and evolving.”

While online grocery shopping continues to grow at a rapid pace in the UK, it appears to be a different story across the Atlantic. In the past week the competitive UK market has digested the news that Waitrose is scrapping its delivery charges and Ocado is to sell 4,000 Waitrose own-label products at a cheaper price than is available in the grocer’s own stores.

The former is bound to have repercussions, as the other major grocers take a close look at their delivery-charging models, and although the latter will have less impact on the wider market it does signify how desperate Ocado is to grow its share of business.

In contrast, in the US, Albertsons announced that it is to stop its home delivery for online orders in all its markets. The only thing it is retaining in certain areas is online ordering for collection in-store, which it says customers regard as a convenient way to shop.

The divergence in the two markets must largely be down to the high density of delivery drops achievable in the UK whereas the vast distances between shoppers in the US does not justify the cost to retailers of offering home delivery services for low margin grocery products. This is undoubtedly why it is still viable in higher density conurbations like New York where FreshDirect is a popular service.

This is at the heart of why Tesco is the world’s biggest online grocer and the significantly larger US market has nothing that comes close to comparing with it.

The UK continues to lead the world as the most international retail market, as Europe maintains its ability to attract the world’s top retailers, according to new research.

The 2009 edition of the How Global is the Business of Retail? report from CB Richard Ellis mapped the footprint of 280 top global retailers across 67 countries, exploring the globalisation of the retail industry at national and city levels to highlight differences between sectors and regions, identifying trends in the patterns of global retail expansion.

The UK outperformed other major European economies such as Spain, France, Germany and Italy to take the number one position within the top 15 most international retail markets, with 58% of all retailers surveyed present.

Europe continues to dominate, containing eight out of the top 15 most international retail locations, although emerging economies such as China, Russia and the United Arab Emirates have gained significant ground in the past 12 months. China, Russia and Japan performed particularly strongly in the 2008 global retail ranking, achieving sixth, seventh and 14th positions respectively. Middle Eastern countries have also seen a marked increase in retailers entering the region. The UAE jumped two places in the ranking, from sixth in 2007 to fourth in 2008, with 45% of international retailers present compared to 39% in 2007. Saudi Arabia also made a notable leap up the rankings from 28th position in 2007 to 15th position in 2008, with 37% of international brands present.

The US registered in 10th position globally, with 39% of international retailers present. This can be attributed, at least in part, to the size, maturity and strength of its domestic market. US retailers tend to penetrate their vast national market extensively before considering international expansion. Canada made the strongest rise up the global ranking of any country in the Americas in 2008, moving into 13th position from 18th, with 37% of international retailers present, a 6% increase from 2007.

Peter Gold, Head of EMEA Cross Border Retail at CB Richard Ellis, says, “Despite the global economic slowdown, many retailers, especially cash-rich private companies, have continued their expansion plans throughout the past 12 months. Our survey of 280 retailers saw them expand their international presence by an average of 12% in the past year, being represented in a further two more countries than in the previous year. This was primarily driven by clothing, footwear and accessories retailers from Europe. Interestingly, retailers have continued not just to internationalise, but to globalise – 40% of all new store openings in 2008 were outside the retailer’s home region.

“It remains to be seen whether this pace of expansion into emerging markets will be sustained through 2009 and 2010. Yet the globalisation of the retail industry is undoubtedly an ongoing long-term trend which is not going away,” adds Gold.

The report analysed which types or categories of retailers have the strongest international presence, and found that luxury retailers dominate global retail in terms of their footprint around the world. Some 90% of luxury retailers have a presence in more than 10 markets and 40% are present in more than 30 countries.

Several American and European retail brands in segments as varied as fashion, cosmetics, lingerie, food & beverages, among others, are preparing to make their presence felt in the Indian market through franchise route, as a result of sharp drop in sales in these markets following economic slowdown. Certain brands from countries like the UAE, Brazil and Thailand are also eyeing Indian market.

“Drop in retail sales in Europe and the US markets are leading to this phenomenon. Retail brands that built great amount of manufacturing capacities are under pressure to offload excess inventories and are therefore entering into alternative sales practices by setting up their franchise in large-sized markets like India,” Gaurav Marya, franchising expert and president, Franchise India Holding, told ET.

Following the collapse of the international retail markets, several brands like Beverley Hills Polo (USA), Spa Siam (Thailand), Taman Gang Restaurants (UK) and others entered Indian market through franchise route.

Others like Revive Juice Bars (UK), Mrs Fields Cookies (USA), Jamba Juice (USA), fashion brand Jules (France), cosmetics brand Mikyajy (UAE), lingerie brand Nayomi (UAE), car-wash service brand Moly Company (Thailand), food & beverages brands Habibs (Brazil) and Herfy, BBQ Chicken (Singapore), Pizza Company and Spicchio Pizza (both Thailand), Marina Furniture (UAE), and Alto Cafe (France) are learnt to be at various levels of negotiation to start their services in India. Companies that have long nurtured ambition to enter retail-friendly markets like India and China are finding this a convenient time as sales in their own countries have tapered. They are trying to convert this as an opportunity to taste Indian waters, which they plan to do for 2-3 years before they decide on their future plans in these countries, says business strategy specialist Harish Bijoor.

“Several brands are looking for green pastures, and India having a decent GDP growth of 4.3% holds lots of potential for them. They are taking up franchise route as they cannot risk coming on their own at this juncture. This also means a big chunk of business coming in for entrepreneurs,” Mr Bijoor said.

Several brands are targeting grade B and C cities rather than expanding in metros, as smaller cities are more brand hungry and retail is not much hit here, say experts.

With the presence of limited brands in India markets, the country holds big opportunity for these brands as this would also help them re-route inventories and orders to new markets and keep their sagging sales volume intact. At the same time, their Indian counterparts are finding this a right opportunity to strike negotiations to their advantage,” added Mr Marya.